‘No consensus on longer market hours’

There is no consensus among market participants on extension of market hours, something recently permitted by Securities and Exchange Board of India, said Mr Ravi Narain, Managing Director of NSE, here today.
“We would love the market to build consensus on what makes sense for them, and we will respond. Some segments of the market are interested in longer hours but the majority of the market seems to be interested in retaining the hours as they are,” Mr Narain said on the sidelines of the Indian Securities Forum here.
“The systems at the exchanges are not a problem, the real concern is the facility to transfer money and margins within the banking system from upcountry.
The second concern is the back-office system, especially of the smaller brokers,” he added.Faster listing

One year from now, Indian companies may be able to list within seven days of closure of their IPOs.
The market regulator plans to reduce the closure-to-listing time from 20 to seven days, as a longer time span makes it too risky for the issuer and the investor, said the SEBI Chairman, Mr C. B. Bhave.
“We are planning on implementing this over the next one year,” he said.
SEBI is also working on extending the Applications Supported by Blocked Amount (ASBA) facility available to institutional investors, Mr Bhave said.
About 25 per cent of retail applications for IPOs come through ASBA, he said.
The stock market regulator might also reduce the cost of mutual fund transactions and tighten regulations for portfolio management.

Source: http://www.thehindubusinessline.com/2009/11/19/stories/2009111952460100.htm

DSP BlackRock Mutual Fund launches DSP BlackRock World Mining Fund

The New Fund Offer (NFO) will commence on November 23, 2009 and close on December 18, 2009.


DSP BlackRock Investment Managers today announced the launch of DSP BlackRock World Mining Fund. The scheme is a fund of funds Scheme investing predominantly into the BlackRock Global Funds (BGF) – World Mining Fund (WMF) which invests in equity securities of mining companies globally. These companies generally operate across various geographies and enjoy considerable pricing flexibility. The New Fund Offer (NFO) will commence on November 23, 2009 and close on December 18, 2009.

Unique Features
DSP BlackRock World Mining Fund provides Indian investors with a unique investment opportunity to benefit from potential growth prospects in the mining sector by investing into mining companies globally

The unique features of this product are:

Provides access to BGF–WMF, one of the largest funds in its category in the world, with a long term performance track record
BGF World Mining Fund is highly regarded and rated by independent agencies.
The scheme provides investors the opportunity for global diversification combined with access to fundamentals of the mining sector and the growth potential of equities
The team responsible for BGF-WMF is one of the stronger Natural Resources Teams in the industry, managing around US$ 31.9 billion in assets as on Oct 30, 2009. Four of the team’s five portfolio managers are geologists/geophysicists – a definite advantage for successful investing in this sector. The core of the team has worked together for over ten years, which has enabled them to build up invaluable experience with regards to the gold, mining and Mining resources industry.

Areas into which this scheme invests
DSP BlackRock World Mining Fund will invest into the BGF-WMF and other similar overseas mutual fund schemes, and will provide investors with access to the fundamentals of the mining sector.

BGF - World Mining Fund invests mostly in the equity securities of mining and metals companies whose predominant economic activity is the production of base metals and industrial minerals such as iron ore and coal. The scheme may also hold the equity securities of companies whose predominant economic activity is in gold or other precious metals or mineral mining.

Key drivers in the Mining sector
The global mining and metals sector is faced with the challenge of responding to the rising demand for resources. While deposits are becoming scarcer and harder to locate, new production is being limited by supply chain bottlenecks and skills shortages.

Current outlook on the Mining Sector
The first half of 2009 saw China aggressively restocking. This drove up the demand for commodities in the first half of the year and caused commodity prices to rise significantly from the lows seen in late 2008. For example, by the end of June 2009, copper had risen 92% from its low. We are yet to see evidence of a material restocking cycle in the US or Europe but once signs of sustainable economic recovery emerge, restocking in these regions should also be supportive for commodity prices.

Despite a supposed slowdown in industrial demand, there were record levels of imports for copper, iron ore and coking into China during the first half of 2009.

We have also seen signs of economic recovery in the Western World with some restocking seen in selected areas e.g. steel, but the full effect is yet to be felt, in our opinion

As we look forward to 2010, it is likely that the impact of stimulus spending on infrastructure projects should begin to come through into the market, as well as a potential recovery in private sector demand. If demand does recover then the supply side is unlikely to be able to respond to the same extent.

The credit crisis has resulted in widespread production cutbacks across most metals. Some of this capacity has been taken offline permanently and the remainder will not be able to be brought back online instantaneously. In addition, a large number of planned expansion projects have been shelved as appetite for taking on development risk has diminished and the ability to finance the projects has reduced.

Such constraints on the supply side lead us to believe that a demand recovery could provide a constructive environment for commodity prices, which are the key earnings driver for mining companies.

Why Invest DSP BlackRock World Mining Fund?

As mentioned earlier, DSP BlackRock World Mining Fund will invest predominantly into the BGF-WMF (Fund). This Fund has a strong long-term performance track record – The Fund is ranked no. 1 in its sector over 5 years, 10 years and since launch and has produced impressive cumulative returns ahead of benchmark over the long term.

Regional and sub-sector diversification – By investing in DSP BlackRock World Mining Fund, which will invest into the BGF-WMF, Indian investors will have the opportunity to diversify investments away from country based asset allocation strategies and gain exposure to sectors of the market which tend to outperform at various phases of the business cycle.

Experienced Team – The Team is one of the industry’s acknowledged specialists, with extensive industry contacts and significant research capabilities, managing US$31.9 bn (As on Oct 30, 2009)* in assets on behalf of clients. The latest August 2009 Standard & Poor’s report refers to the Fund as being “Managed by BlackRock’s expert natural resources team”.

In-depth research process – the managers really apply a kick-the-tyres approach to the companies in which they invest. It is only by meeting with company management, attendance at industry events and research trips to company assets, as well as extensive commodity and equity analysis that the stock-specific risks within the portfolio can be evaluated fully.

The Fund has been awarded the maximum AAA ratings from both Standard & Poor’s and OBSR. The Fund was also awarded an “ELITE” Morningstar Rating in July 2009. The fund achieved “24 1st place awards” for performance excellence worldwide in 2008 from a number of recognised ratings agencies and publications.

The Fund strategy
The Fund’s endeavour to incorporate the ‘best ideas’ in the portfolio instead of just following a benchmark driven approach. The wide experience of the portfolio managers as well as their sector perspective of companies across the globe help them ensure that the best global ideas are reflected in the portfolio. The Fund focuses on a bottom-up approach to portfolio construction coupled with a top-down sub-sector overlay.

Speaking to the media, Mr. S. Naganath, President and Chief Investment Officer said, “DSP BlackRock World Mining Fund provides investors with an opportunity to diversify their portfolio and access the potential growth prospects of the global mining sector”

Source: http://www.indiainfoline.com/Markets/News/News.aspx?NewsId=15032

MF could give financial inclusion another dimension

Technology has simplified our lives. So why should it be any different for our investments? If the internet and mobile phones have made banking — one of the most time-consuming affairs — a pleasant experience, mutual fund transactions are not far behind! Come March 2010 and Indian investors will wake up to a gateway of convenience and simplicity as far as their mutual fund investments are concerned. So what is this gateway? Why are newspapers these days flooded with updates about an ‘online mutual fund trading platform’ ? Will this online gateway indeed change the face of the Indian mutual fund industry? Or will it open the doors for the listing and trading of mutual fund schemes on the bourses in future?
The online MF trading platform would probably do to the mutual fund space what dematerialisation (demat) of shares has done for the traders and investors in the equity market. It will be an online convenience gateway where mutual fund schemes can be bought and sold at the click of the mouse, payments directly debited from the bank account and units purchased or sold credited or debited to the investors’ demat account just like the way the shares are traded today. No long waits for the dividend cheques as well, as they shall be directly credited to bank accounts.
The catch here, however, is that while the shares are listed and transacted at the spot price, mutual funds shall be bought and sold at the net asset value (NAV) of the previous day – as is the current practice. Similarly, while the redemption orders will be accepted at a click of the mouse, the current redemption cycle of T+2 days shall continue to exist, meaning, that while the orders will be accepted on Day 1, the redemption proceeds shall be credited to the investors’ account only by the third day.
So where is the value addition? Does an online gateway merely imply saying no to paper? The real convenience stems from the fact that the gateway will empower investor to makes choices. The platform is likely to be designed to facilitate not only buying and selling of mutual fund schemes but will also be loaded with information on various mutual fund schemes, their performances, updates, analysis, trends etc. Moreover, if an investor is unhappy with the performance of a scheme of a particular fund house, say ‘A’ ; he will be empowered to transfer his investments from ‘A’ to a better performing scheme of another fund house ‘B’ within seconds through the click of the mouse. Any applicable exit load shall be automatically deducted from the investment and the balance will be transferred to an absolutely new fund of a new fund house—no paper work or other formalities. While currently too an investor can easily switch between MF schemes, the swapping can be done between the schemes of the same fund house.
Another interesting facet of the online MF portal will be its ability to provide the investors a consolidated view of all their mutual fund holdings. Say an investor has investments in 10 different mutual fund schemes, keeping a track of all of them is tedious. The platform will combine the information on all MF holdings of the investor and present a consolidated screen shot view with the latest NAV to help investor keep track of all MF investments along with their current sale value. In case of systematic transfers, it will now be easier and convenient to keep a track of regular monthly debits in the bank accounts and credits of mutual fund units in the folios. No more waiting for the annual or biannual MF statements by post!
The features are aplenty, but what about the costs? Are these services free of cost?
Market regulator Sebi has scrapped entry loads from the mutual fund investments in order to bring transparency. Keeping that in mind, the new platform will be linked to the demat account of the shareholder and the commission payable on every MF transaction shall be mutually determined between the investor and their respective brokers, who in turn will have to be a Depository Participant (DP).
The online platform may also make life easier for distributors who now find it tough to convince investors to issue separate cheques for commission. As MF trading will now be akin to share trading where the commission will evolve into a small brokerage charge, investors may pay it without much resistance. There are also fairly bright chances that competition and price war between brokerages may make these commissions highly competitive.
Though simplicity and convenience are the two major aspects that the MF industry is aiming to achieve through this platform, it is in fact the reach and the penetration – the grey areas of this industry for a long time now—that it expects to deal with through this gateway. It will thus become easier and much more convenient for those placed in remote districts of the country to invest in mutual funds either directly or through their distributors who will have online access to the portal as the portal is not restricted to demat account holders alone.
To learn more about this MF trading platform and its impact on the fund houses, distributors and the investors, turn to page three where the two honchos of the industry share their views on the new concept.

Source: http://economictimes.indiatimes.com/features/investors-guide/MF-could-give-financial-inclusion-another-dimension/articleshow/5234106.cms

MFs have served both small and large investors well

Mutual Funds have the expertise of managing products across the risk return spectrum. Correspondingly, for large and small investors, mutual funds offer an opportunity for deployment of savings based on individual risk taking capabilities and corresponding return expectations. This unique capability of mutual funds has helped individuals and large/institutional/corporate investors enhance significantly their return on savings over the last decade. The industry in India has some very high quality global and local players, very high quality of regulation and has a long track record of delivering returns in line with risk profile of products across the spectrum.
Mutual funds have offered great value to large and small investors. The industry in its modern form and shape is about 15 years old. The participation of individual investors in the industry has grown significantly in this period and today we have a situation where the total number of mutual fund folios actually exceeds the total number of demat accounts. Thus, more individuals are participating in India’s capital markets through mutual funds than directly through purchase and sale of other securities. This growing family of individual investors is a testimony to the fact that the industry has been able to manage the savings of both large and small investors in a transparent and efficient manner thereby creating value for all.
Investments made by large institutions have in fact helped the mutual fund industry bring down expense ratios for a large number of debt products where the institutions invest significantly. In fact, a study of the industry shows that for most debt products, the expense ratio is significantly below the limit provided under regulation.
Global experience shows that the skill of money management needs to be made available both to individuals as well as to large investors/institutions. In fact, if one studies the example of other countries like Brazil and China that have a large mutual fund industry, one finds a significant participation of institutional investors in mutual funds.
The mutual fund industry in Brazil is over $600 billion and that in China is over $300 billion. While the retail participation in mutual funds in India has increased, we have a long way to go as penetration is very low. However, the efforts of the industry are now resulting in this penetration gradually improving and increasing and investors from over 300 cities now actively participate in investing in Indian mutual funds. The industry has also provided service to institutional/corporate clients in this period.
These institutions/corporates are in turn owned by a large number of individual investors. Availability of skilled money management advice to these institutions has helped them enhance their own return on investments thereby in turn benefiting their millions of shareholders. The industry now has a 15-year track record of managing products across the entire risk return range and delivering high quality consistent returns over a long term timeframe. The focus of our efforts should now be to increase the reach and availability of this expertise available with Indian mutual funds to a wider range of individual and institutional investors to enhance the productivity of capital in our economy.

Source: http://economictimes.indiatimes.com/ET-Debate/MFs-have-served-both-small-and-large-investors-well/articleshow/5237931.cms

The financial panic is over: Warren Buffett

Warren Buffett, perhaps the world's most admired investor, said on Thursday the financial panic that gripped the globe last year is a thing of the past, even as the US economy's struggles persist.
"The financial panic is behind us," the world's second-richest person said at Columbia University's business school. "Our economy was sputtering, still is sputtering some."
Buffett, 79, nevertheless said there is greater opportunity for investments inside the United States than outside, noting that the US economy is far larger than any other.
He appeared at Columbia with Microsoft Corp founder Bill Gates, the world's richest person and a Buffett friend and bridge partner.
Last month, preliminary government data showed the US economy expanded in the third quarter, the first three-month period of growth since the second quarter of 2008.
Nonetheless, the US unemployment rate last month reached 10.2%, the first double-digit reading in 26 years.
Buffett last week made a big bet on the US economy when his Berkshire Hathaway Inc agreed to pay about USD 26.4 billion for the 77% of railroad company Burlington Northern Santa Fe Corp that it did not already own.
"There will be more people in this country, 10, 20, 30 years from now," Buffett said. "They'll be moving more and more goods back and forth to each other and the most environmentally friendly and cost-efficient way of doing that is railroads."
Buffett said rail transport uses one-third less fuel and pollutes the air less than trucks, and that one train can supplant about 280 trucks.
Gates, who is also a Berkshire director, said other sectors might also boost the economy over the long term, including information technology, energy and medicine.
Separately, Buffett advised the US government not to coddle companies that need bailouts to survive or preserve capital.
"More sticks are called for," he said.
Buffett gave Federal Reserve Chairman Ben Bernanke and US Treasury Secretary Timothy Geithner "high marks" for how they managed the financial crisis.
The billionaire has praised Bernanke in the past, while mocking Geithner's stress tests for banks.

Source: http://www.moneycontrol.com/news/world-news/the-financial-panic-is-over-warren-buffett_424662.html

Trading in MF units allowed

Investors will soon be able to buy and sell mutual fund (MF) units on stock exchanges.

India’s capital market regulator on Friday announced this game changer for the Rs7.62 trillion MF industry, three months after it abolished upfront commissions that were being paid to MF distributors.

“The infrastructure that already exists for the secondary market transactions through the stock exchanges with its reach to over 1,500 towns and cities, through over 200,000 terminals can be used for facilitating transactions in mutual fund schemes,” the Securities and Exchange Board of India (Sebi), said in a late evening release.

Currently, investors buy MFs either from a distributor or from asset management companies (AMCs).

A few online portals, too, sell these units. The exchange platform will be a critical new channel for the industry, say asset managers.

A.Balasubramanian, chief executive officer (CEO) of Birla Sun Life Asset Management Co. Ltd that manages Rs65,053 crore, said the move will help both the AMCs as well as the investors.

“It will be a cost-efficient channel for both. It will not take much time to implement as we will leverage the existing technological platform and nationwide network established by the exchanges,” he said.

In order to be able to sell MF units through exchanges, stock brokers will need to pass a certification course offered by industry lobby, Association of Mutual Funds in India, Sebi said.

The move comes as a breather to AMCs, hit hard by the market regulator’s move to ban upfront commissions charged by asset managers from 1 August.

The industry has been seeing more redemptions than sales since August. In a recent interview with Mint,U.K. Sinha, chairman and managing director of UTI Asset Management Co. Ltd, said: “No industry can survive with this kind of negative sales.”

“Mutual funds will have a wider geographic reach through exchanges as equity brokers will become eligible to sell fund units like shares. At present, 70-80% sales of mutual funds come from 10 cities, but with this move, funds will be able reach across the country where the two depositories record share sales,” said Dhirendra Kumar, CEO of New Delhi-based MF tracker Value Research.

He, however, does not see any immediate rise in assets of MFs even though this will simplify the procedures of investments in such instruments.

According to Piyush Surana, CEO of Shinsei Asset Management (India) Pvt. Ltd, the exchanges cannot replace the sales function (of distributors) and it is only an additional procedural facilitation. “The move makes mutual funds more accessible to investors, but someone has to sell the fund and someone has to buy. Essentially, one needs to convince the investors (to buy and sell),” he said.

Ashutosh Wakare of Money BEE Institute, a training institute for MF distributors, said it requires a transformation of mindset of investors as “you are bringing a passive investor into an active platform”.

“The idea is to facilitate the buying of mutual fund units through an avenue which has a greater reach. But, I don’t see any distinct advantage of this move, because mutual funds will still be required to be sold through the conventional concept selling methods,” said Hemant Rastogi, CEO of Wise Invest Advisors Ltd, an MF advisory firm.

It is not known when the exchanges will start trading of MF units.

A few online portals that help investors buy and sell MF units say the exchanges are in talks with them. Maju A. Nair, associate vice-president (MF- product manager), Sharekhan Ltd, said the National Stock Exchange (NSE) has already made a presentation of its proposed platform to the brokerage. He is meeting the Bombay Stock Exchange (BSE) soon. “It will make life easier for the online portals as the depositories will take care of the back-office—interactions with registrars,” he said.

Derivatives expiry:
Sebi on Friday also allowed the stock exchanges to set the expiry day for equity derivative contracts. At present, the expiry day for equity derivatives is the last Thursday of every month on both the stock exchanges—NSE and BSE.

Source: http://www.livemint.com/2009/11/13225958/Trading-in-MF-units-allowed.html

SEBI allows registered brokers to deal in mutual fund products

In the light of entry load abolition to distributors.

Stock brokers need to clear AMFI certification to become distributors
No price discovery, just another order routing system for MF units
Investors can hold units of MF schemes in demat accounts

In a move that could considerably widen the distribution network for mutual funds, SEBI on Friday allowed registered stockbrokers to transact mutual fund units on behalf of their clients through the stock exchange mechanism.

“The infrastructure that already exists for the secondary market transaction through the stock exchanges with its reach over 1,500 towns and cities, through over two lakh stock exchange terminals can be used for facilitating transactions in mutual fund schemes,” the SEBI circular said.

Stockbrokers will be eligible to be considered as official points of acceptance, the circular said. These stockbrokers need to pass AMFI’s (Association of Mutual Funds in India) certification examination, and become empanelled distributors.

Every mutual fund has to disclose the locations of its official points of acceptance in its offer documents and Web sites.

Selling through the stock exchange mechanism basically means an additional order routing system for buying or selling mutual fund schemes; there is no price discovery, said a senior official at a transfer agent’s office.

End-users can use the convenience of their neighbouring broker’s office for their mutual fund transactions, said Mr Mayank Shah, CEO of Anagram Stock broking.

Whether brokers can charge a fee for the service or not is unclear. But Mr Shah felt a fee structure would evolve once the system is in place.

This issue must be seen in the light of SEBI abolishing the entry load on mutual fund investments for distributors, starting August 1. This affected distributor income as well as inflows into equity schemes.

Currently investors roughly pay 1.25 per cent as commission to distributors; 0.75 per cent is upfront commission and the rest in the form of “trail commission” (when an investor remains invested in his fund).

“Once the broker starts acting as a distributor, there is an issue about what commission he might ask for and whether the client would be ready to pay that or not,” said a broker.

The SEBI circular on Friday also said that investors can hold units of mutual fund schemes in dematerialised form, and that the demat statement given by the depository participants would be deemed adequate compliance with SEBI norms.

Further, the stock exchanges should provide for an investor grievance handling mechanism to handle disputes between brokers and their clients. The time-stamping for transactions would be in the form of a confirmation slip issued through the stock exchange mechanism. The markets regulator has asked the stock exchanges to provide detailed operating guidelines for facilitating transaction in mutual funds on their platform by their member-brokers.

Source: http://www.thehindubusinessline.com/2009/11/14/stories/2009111451880100.htm

Seeking experts' help in buying MF

Rather than looking at recent and past performances as a parameter for investing into an equity mutual fund, you will do well to make a mental note of a host of qualitative and quantitative factors that a professional at financial management puts before you before recommending which mutual fund to buy.

Buying the best performing mutual fund of tomorrow is the aim of all investors, as ‘buying low and selling high’ is their credo. Both are next to ‘impossible’. Those who get it right are more fortunate than smart.

A study in the US showed that $1 lakh invested in S&P 500 in 1984 would have become $13.01 lakh by 2000-end. But the average stock investor’s money grew to only $2.41 lakh. Investment guru Marc Faber attributes the underperformance of such investments to the chase of ‘hot’ sectors. Those who don’t understand the dynamics of business should best assign the job to professionals — read professional money managers or mutual fund managers.

For most financial planners, the starting point before recommending an equity mutual fund is doing a financial plan for the client. This involves sitting with the client, understanding his/her cash inflows and outflows, goals and needs. Based on all the inputs, they would broadly classify a client as conservative, moderate or aggressive. Once this classification is completed, recommendation of funds would be the next step.

These recommendations would be based on qualitative and quantitative factors. Take the quantitative factors first. Things like the risk-adjusted returns, sharpe ratio, beta and returns over various periods of time like three-, 6-month, 1-year, 3-year are taken into account and given weightages. Then comes research on the portfolio quality: what percentage of the portfolio do the top 10 stocks constitute? What percentage of allocation is done to various sectors? Does the folio comprise illiquid stocks?, and the like. The qualitative aspect encompasses the number of years the fund house has been around, cumulative experience of fund managers and their past track record.

“Then there are other important things like accessibility and level of comfort with the fund manager,” says Akhilesh Singh, head of wealth management, Emkay Global Financial Services. His final recommendation is done by adding together the qualitative and quantitative parameters. Besides, any fund, which has a corpus below Rs 400 crore and less than a year’s track record, is not recommended by him. The top five funds which find favour with him are HDFC Equity, ICICI Prudential Discovery, HDFC Top 200, UTI Dividend Yield and UTI Equity Fund.

“All decisions taken by a fund manager are reflected in the net asset value (NAV) of a scheme. While selecting a fund we look at NAVs on a daily basis and compare them with their peers over a one-year period,” says Yogesh Kalwani, head-investment advisory, BNP Paribas Wealth Managers. Among large-cap funds, Mr Kalwani recommends, are HDFC Top 20, DSP Blackrock Top 100, Birla Sunlife Frontline Equity and ICICI Prudential Focused fund.

“We recommend funds on the basis of philosophy, discipline and predictability of the performance,” explains Sumeet Vaid, founder, Ffreedom Financial Planners. He believes that in the process of reaching one’s financial goals, stable fund houses are key to investment. So, the equity funds that find favour with him in the large-cap category are HDFC Top 200, DSP Blackrock Top 100 and ICICI Prudential Dynamic Fund. Among mid-cap funds, he recommends Birla Midcap and Reliance Growth Fund.

“Qualitative factors are given a higher weightage than quantitative factors while recommending funds to clients,” says the head of investment advisory at a foreign bank. Though qualitative factors such as investment process, service quality and communication with the investors are strictly not measurable, quantitative performance of mutual fund are.”

Source: http://economictimes.indiatimes.com/articleshow/5224723.cms?flstry=1